Wednesday, August 13, 2008

R&D costs cut Lake profits 46% to €2m

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SIMON CARSWELL, Finance Correspondent

DUBLIN TELECOMS equipment company Lake Communications has posted a 46 per cent drop in profits for the 16 months to the end of April due to increased spending on research, development and marketing of products, writes Simon Carswell .

Pretax profits fell to €2 million for the 16-month period, compared with €3.8 million for the 12 months to the end of December 2006, despite turnover rising almost 6 per cent to €28.4 million, according to newly filed accounts.

The Dublin firm was bought by US firm Inter-Tel in 2005 for $28.7 million (€21.3 million) in cash and an additional earn-out payment of $13 million (€9.6 million) in 2006. It is now owned by Canadian company Mitel, which acquired Inter-Tel in 2007.

Managing director Anthony Bermingham said Lake had taken charge of research, development and marketing of voice and data telephone and network systems for small offices within the Mitel group.

He said the firm's main partner was Eircom but that its largest customer was BT in Britain.

The company would be developing and selling products for markets where Mitel already had a sales presence and into new markets in Asia and South America, he added. "It's a bit tougher out there this year but we have to knuckle down," said Mr Bermingham.

The firm benefited from a €183,000 tax credit in the 16 months to the end of April when it had accumulated tax losses of €11.7 million. It had retained profits of €930,000 at the end of the 16-month period.

The firm, which employs almost 100 people, had a wages bill of €6.2 million in its most recent accounting period, compared with €4.5 million in the previous 12 months. Directors of the Tallaght-based firm shared €865,000 in pay over the 16 months, compared to €626,000 in 2006.

The firm was purchased in 1991 by its management team, including Mr Bermingham, from Swiss firm Landis & Gyr. Lake made an operating profit of more than €3 million from revenues of €30.5 million in 2005.

This article appears in the print edition of the Irish Times